Please click the link to listen to the 18th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Comments and critiques welcome. Please consider dropping a like and or a review on iTunes or Podbean if you like the podcast.
Two Minute Crypto – Retail Crypto Investors
Welcome to Two Minute Crypto – today sees the beginning of a two-part series focusing on retail crypto investors. In this episode, I’d like to focus on a few reality checks that are absolutely essential to a retail crypto investor’s success. For simplicity, by retail investor, I mean someone who places capital in the crypto market with a minimum of a 3-year horizon. They may well exit their investment before that point but the intention is to put aside capital for a number of years.
Reality check one – Being a crypto enthusiast does not mean you are well informed – the information you review is often 2ND and 3RD hand in nature – you are not an insider. The best you can do is delve into the information available, exercising a healthy dose of skepticism and research as much as practical. Most of the information available to you is garbage at best and intentionally misleading at worst. Time, time and more time is required to garner a nose for sifting the good sources of information from the bad. No real short-cuts here.
Reality check two – You are not the smartest person in the room. That accolade goes to the thirty-year investment professional backed by a research team and a multi-million dollar tech infrastructure. The best you can realistically hope for is be ahead of the common herd of crypto investors and generally, that should be enough. Sectarianism, false dichotomies and fanboy posts are not the means by which to guide your investment decisions. You can be both bullish on crypto and bearish on current projects there’s absolutely no cognitive tension here.
Reality check three – You are going to be wrong and lose money on some investments. Have an exit plan for profit and more importantly loss and stick to it. No matter how much research you conduct or how worthy the project – probability tells us many investments will fail – accept the parameters of your investment and stick to it or the dreaded doubling down on loss will soon become your bedfellow.
Reality check 4 – You are not as patient as you claim to be. Investing in anything over the long term is difficult and the high volatility world of crypto is especially so. We are bombarded with conflicting narratives and somewhat perversely the more engaged you are in the cryptoverse the more difficult it becomes to retain a long-term zoomed-out focus. The day to day messaging of crypto to the moon or crypto to zero draws you in and slowly but surely erodes your long-term investment thesis. Beware the late night kneejerk sell on bad news or indeed the doubling down on bullish news. Here again, a clear entry/exit/profit/loss plan will serve you well.
Next week will examine some of the advantages a crypto retail investor may have over a trading desk or institution.
Thanks for listening.